The Week That Was in Europe Global Value Chains Under Pressure: What Future for Them? With Gabriel Felbermayr
Dec 13, 2024
Gabriel Felbermayr, an expert in international economics and President of the Austrian Institute of Economic Research, dives into the evolving landscape of global value chains. He discusses how COVID-19 spurred rapid changes in trade dynamics, especially in the automotive sector. Geopolitical tensions, like the Russia-Ukraine conflict, are reshaping alliances and trade strategies. Felbermayr also highlights challenges posed by new tariffs on Chinese electric vehicles and the complexities of sanctions affecting global trade.
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COVID Reveals Fragile Yet Resilient Chains
- COVID exposed global supply chains' fragility but also showed they can rebound quickly once disruptions end.
- Freight price surges also contributed significantly to post-pandemic inflation waves.
Trade Bloc Fragmentation Emerges
- Trade blocs are forming, with intra-block trade growing faster than inter-block trade and some countries reducing trade costs with Russia despite sanctions.
- Firms already respond by reshuffling production, like German carmakers increasing U.S. output to avoid tariffs.
Limited Gains from EU-China Car Tariffs
- European tariffs on Chinese electric vehicles cut China's exports by around 42%, protecting domestic industry marginally.
- The overall economic gain for Europe from these tariffs is very small, around 0.4% additional value added.